2011 UBA Health Plan Survey

Plan enrollment jumped 18 percent in 2011

 of LifeHealthPro points to to new analysis from the American Association of Preferred Provider Organizations (AAPPO) that enrollment in consumer-driven health plans is far outpacing other types of health coverage, especially among large employers. Consumer-driven health plan offerings (CDHPs) increased dramatically from 2010 to 2011:

  • An increase from 23% to 32% among employers with 500 or more employees – the biggest one-year increase AAPPO has seen so far.
  • 48% of the largest US employers (20,000 + employees) offered CDHPs in 2011.
  • 54% expect to offer them in 2012.

Even small employers (under 499 employees), which are historically the least likely to offer employees a CDHP option, saw growth from 16% to 20% last year. Altogether, enrollment in CDHPs grew by 18% in 2011, up from 28 million to 33 million over the course of a year.

A Growing Trend

AAPPO says the trend started in 2008 and continued through 2010, the popularity of CDHPs corresponding with a decline for HMOs. The trend shows no sign of abating. Said Karen Greenrose, AAPPO president and CEO:

Our stagnant economy combined with the uncertain fate of the Affordable Care Act has forced employers of all sizes to seek innovative ways to reduce what they spend to cover their employees. Given the cost savings inherent in the consumer-directed model, it’s clear that employers — especially our largest ones — are increasingly looking to CDHPs to do that. In today’s tough environment, CDHPs — which are predominantly built on PPO networks — offer the affordability, choice and access that employers and consumers alike are looking for.”

Today, of the 256 million Americans that the U.S. Census Bureau estimates have private or government health insurance:

  • 204 million are enrolled in PPO-based plans, including point-of-service and consumer-driven plans.
  • HMO enrollees represents the remaining 52 million (19%).

CDHPs Offer Employee Choice, Employer Savings

CDHPs are health benefits plans introduced in 2001 that typically combine high-deductible health insurance with a tax-advantaged account that can be used to pay deductibles. In practice, there is a wide variation in what employers call a consumer-driven health plan.

Advocates say these plans ultimately will help to decrease the number of uninsured, encourage cost-consciousness among consumers and increase the amount of information on the cost and quality of providers. Critics say they do little other than shift costs from employers to workers, and favor wealthy and healthy participants at the expense of those with lower incomes and poorer health. Characteristics of CDHPs include:

  • A three-tier payment structure:
  1. A tax-exempt health account to pay for health expenses up to a certain amount,
  2. A high-deductible health insurance policy that pays for expenses over the deductible.
  3. A gap between those two in which the individual pays any health care expenses out of their own pocket.
  • Individuals have the opportunity to to save money that they do not spend in the current year for health care expenses in future years (in some plans, these amounts can be withdrawn during retirement)
  • Support systems (usually on the internet) to help individuals select good providers, get  reasonable prices, track their health care expenses, and improve their health

Tennessee Representative and chairman of the House Education and Workforce Health Subcommittee, Phil Roe says:

It’s obvious that the CDHP/HSA model is filling a significant void in the marketplace. As a physician, I know that patients are demanding greater personal control over their health care decisions, and their employers want more affordable and manageable costs. CDHPs – and the PPO networks they are built on – are clearly meeting that demand.

The Next Few Years Will Be Pivotal

The latest of three annual surveys released last month by the nonpartisan Employee Benefit Research Institute (EBRI) and the Commonwealth Fund produced mixed results for consumer-driven and high-deductible plans. Among its major findings:

  • Enrollment is still low but growing: Overall, 7.5 million adults ages 21 – 64 with private insurance, representing about 7% of that market, were either in a consumer-driven or a high-deductible health plan in 2007.
  • High-income enrollees: 31% of  adults enrolled in CDHPs last year up from 22% percent in 2005. That compared with just 19% with incomes under $50,000, down from 33% in 2005.
  • Satisfaction rates are lower but increasing: Participants continue to be less satisfied with various aspects of their health plan than those with more comprehensive insurance, but were somewhat more satisfied with their plan in 2007 than in the two previous years.
  • Participants are more cost-conscious: Adults in consumer-driven plans are more cost-conscious in their health-care decision making than those in more comprehensive plans, and more likely to talk to their doctors about treatment options or to ask for a less costly generic drug.
  • More missed care: In all three annual EBRI/Commonwealth surveys, participants were more likely to skimp on needed medical care or medications because of cost than those in more comprehensive plans.
  • Health-care information still not available: No significant gains were reported by plan participants in the amount of information available on provider cost and quality, two keys to making the plans a success. Other research suggests that consumer-driven plans may be doomed if the lack of consumer information and education is not addressed.

No Significant Savings Yet

A new report by Milliman and the National Business Group on Health (NBGH), looking at six employers’ plans with 30,000 workers, found that consumer-directed plans created a “modest” 1.5% savings for employers. The study showed that the savings were due to higher cost-sharing by workers, which discouraged utilization. The results reinforced the need for better consumer information, Milliman and NBGH said. Actual savings are likely to increase when participants have the patient education resources they need to compare and shop for health care based on quality and cost.

Still, They Appeal to Employers

Various studies, including the one cited above, show that employers will continue to expand these offerings and that some consumers will be receptive.

The Center for Studying Health System Change said that its visits to 12 nationally representative communities found that employers have increased the introduction of consumer-driven plans in the past two years. Their study found that consultants on health plans and benefits predict that more employers will offer these products, and that an economic downturn might also prompt them to move in this direction.

Another report this month by Deloitte Consulting concluded that “consumerism is a significant trend” in health care and demand is likely to grow.

So growth of CBHPs seems inevitable as employers continue to look for ways to control their health-care costs, and currently tend to see consumer-driven plans as the vehicle of choice. However, this growth trend could be stalled if these plans fail to show proven savings, or if workers’ dissatisfaction with them increases.